As the Market Normalizes, One Change Still Caught My Eye
Small-caps and mega-caps moving in tandem, Utes are on the rise, what could be better? Well, the math gets harder soon. Also, when to buy Nvidia, sell Microsoft and much more.
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The Market
That was the rally? Gosh it was dull as can be.
But did you notice that stocks in general were able to move in tandem? Oh sure the small-caps outperformed the S&P 500 (but not the Nasdaq) but that’s not what has been the issue these last few months.
The issue has been that they are not rallying or selling off together. However, since the Great Unwind finished up last week we have had a more normalized market. Let’s hope it stays that way.
An item worth flagging from the day is that the Utes were up while bond yields were up too. I am always pleased with the market when the Utes are on the rise.
The number of stocks making new highs lagged. So for now we’re back to that again.
However, it was the ISE equity call/put ratio that caught my eye as a change. It pushed to the lowest reading (1.61) since late May. That is a change. I’m not sure what to make over it but right after that the mega-caps stocks began moving in one direction (up) while the small-caps wallowed and slipped a bit lower.
But none of the indicators changed. Let’s see if we can get another day of rallying. After that the math gets a bit harder.
New Ideas
It has taken quite some time for me to think Kellogg KLG is OK again. I am inclined to be a buyer with a stop under $15. Earnings are out August 6 so let’s hope it rallies over $17 before then.
Last week we revisited KraneShares CSI China Internet ETF KWEB and I reiterated that I was a buyer at $27. We got a small pop Monday but now I want to use a stop below $27 because if the stock cracks back under there I am wrong to bottom fish it.
Today’s Indicator
The 30-day moving average of the advance/decline line is still not overbought. I still anticipate it will get that way near the end of the month.
Q&A/Reader’s Feedback
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When Nvidia NVDA came down in June and everyone decided the top was in I said let’s wait and see if we can get the pattern to shape up again for the stock to be a buy. I still feel that way.
Was last week the buy and I (possibly) missed it? Maybe but I think we are more likely than not to see this lift retreat again. The stock has generally been one that sets up well before it is going to make a run (see my recommendation in May, and also last December). For now it’s a trading range to me.
I suspect that BioNTech BNTX has another rally in it but it’s tough to get excited because of all that resistance overhead. If the stock cannot get over $90 by the end of the month (when I expect we’ll be intermediate-term overbought) then I’d look for another trip to retest $80-ish in August.
The question is where to sell the Microsoft MSFT bounce. I would start with taking a little off around $445-450. There is no top in place here and resistance is minimal.
